'Widely misunderstood' Huawei attempts to put the record straight, vows more transparency

Huawei Australia chairman, John Lord, has gone into extraordinary detail about the company's ownership structure and history in an effort to address concerns about security risks of the company's products

Huawei Australia chairman, John Lord, has gone into extraordinary detail about the company's ownership structure and history in an effort to address concerns about security risks of the company's products.

Addressing members of media at the National Press Club in Canberra, Lord stressed the Chinese telecommunications company operates as a private company with no ties to the Chinese government and "will never" allow its equipment to be misused by either the Chinese government or a third party.

Huawei has offered up "complete and unrestricted access" to its software source code and equipment in an environment where national security is in question. He pointed to a similar effort in the UK where it is building UK's equivalent of the National Broadband Network (NBN).

"This is the exact process which has been established in cooperation with the Government of the United Kingdom, where Huawei has given British security agencies access to its our source code in a Cyber Security Evaluation Centre, allowing agencies to test the security credentials of Huawei equipment," he said.

According to Lord, the telecom equipment market should be a level playing field for all other telecom vendors. In a world with global technology supply chains, every major telecommunications equipment provider has a substantial base in China, he noted.

"In the interests of national security we believe all other vendors should be subject to the same high standard of transparency," he said.

Lord said Huawei's ownership has been especially misunderstood.

"It is best described in the Australian context as a co-operative," he said.

Huawei, founded in 1987 by its global CEO, Ren Zhengfei, has about 60,000 shareholders who are all Huawei employees - all Chinese citizens as per regulations for private company ownership. The company is looking at ways to compensate all of its 140,000 staff with an alternate shareholding structure.

Huawei has been mired by controversy in recent months with the U.S. House Intelligence Committee report that Huawei posed a security threat as the company's equipment could potentially be used for spying. It was also banned from participating in Australia's ongoing NBN for reasons that were not publicly-stated, noted Lord.

With regards to the Australian NBN, the company has accepted the government's decision.

"While we are disappointed, we have accepted the Government's decision and we have moved on. Of course we stand at the ready if the situation changes," he said.

With regards to the Congressional report in the US, Lord said the company had become a victim of political distractions in the US in an election year and hoped Australia would allow for a more "sober" debate on cyber security.

Lord called for an "open and competitive" and a "universal, non-discriminatory approach" to Australia's critical infrastructure decisions.

"It was a virtual unknown to most Australians as recently as last year, despite the fact that over 50 per cent of Australians were already using Huawei technology for some part of their telecommunications needs," he said.

Lord said the company has done a "poor job of communicating" about itself. "For the majority of Huawei's 25-year existence we have been a business-to-business company with little need to 'sell ourselves' to the general public."

"Reading many media reports, you would get the impression that Huawei is in some sort of war with Australian security agencies - we are not," he said.

He also made several references to a global supply chain in ICT sector and said calling any technology "foreign" or "local" is no longer accurate.

"The mobile phone in your own pocket could contain technologies from up to two dozen countries. The Apple iPhone wears the label "Designed by Apple in California - Assembled in China". So is it an American device? Is it a Chinese device? It contains a touch screen from Japan, a processor from Korea, semiconductors from Germany, and intellectual property from across the world."

For Huawei's part, it sources 70 per cent of its materials from companies based outside China including Australia, he said. The US is the largest provider of its components, with almost a third of its materials sourced through 185 US suppliers; 22 per cent of its materials come from Taiwan, and 10 per cent from Europe, he said.

He also attempted to allay fears about accusations in the US that Chinese companies could resort to corporate espionage and steal intellectual property from American telco companies, by noting the growing number of patent applications the company has underway, and massive amounts of dollars it is putting in R&D.

"For too long, innovation leaders like Huawei have been labelled by outdated thinking that Chinese companies would rather steal intellectual property than produce it. The facts tell a different story," he said.

"Every year for the past five years, Huawei has been listed in the top five companies for new patent applications by the World Intellectual Property Organisation. In 2008, Huawei ranked at number one across all sectors in new patent applications. In total, Huawei holds over 26,000 innovation patents."

He urged that Australia must reap the benefits offered by the globalised ICT industry and "the innovation pouring out of Asia and China."

"As we enter the Asian Century, anything less would risk Australia being left behind," he said.

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